Regulatory Impact Assessment

Regulations can safeguard people and property, boost the economy and protect the environment, but they can also impose an administrative burden and significant costs, particularly on small businesses. Regulatory Impact Assessments (RIA sometimes referred to as a Regulatory Impact Analysis) were introduced by government in response to these concerns.

Government departments and agencies proposing new regulations, or amendments to existing regulations, prepare a Regulatory Impact Assessment which assesses its likely impact. They explain the objective of the proposed regulation, its likely costs, risks and benefits. Changes should only be introduced when other alternatives have first been considered and rejected and where the benefits justify the burdens.

In a report to Parliament in 2001, Better Regulation: Making Good Use of Regulatory Impact Assessments, Sir John Bourn, Head of the National Audit Office (NAO) suggested that RIAs had contributed to better policy making and reduced costs to business but that there was room for improvement. He suggested three factors which characterised good RIAs:

• Starting early.
• Consulting effectively.
• Analysing costs and benefits appropriately.

It was proposed that policy makers should evaluate a range of options (including not regulating) and encourage self-regulation where feasible.

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